Pacific Medical Center

Pacific Medical Centre
Executive
Overview
Diabetes is a potentially disabling disease and has been a significant
and growing threat to public health. The largest impact of diabetes has
mainly manifested among adults of working age. In the U.S., statistics
indicate that close to 23.6 million people are diabetic. Estimates
highlight that diabetes cost has risen to over $290 billion accounting
for both direct and indirect costs. The Pacific Medical Center will
avail comprehensive care for complex cases of diabetes and preventive
management for all diabetic patients and those with pre-diabetic
conditions. The essential components of the center will entail the
development of a phased-in outpatient center that will initially avail
services in endocrinology, education, nutrition counseling, and nursing
care management.
Pacific Medical Centre (PMC) will carefully balance mission and margin
considerations in making decisions regarding the direction which best
serve the patients. The budgeting process will enable PMC to take off
successfully since inaction could yield to considerable financial
difficulties. It is complex to quantify the full scope of the projected
demand that the epidemic will place on the PMC. Nevertheless, a
proactive approach to treating complex diabetes within an outpatient
facility will minimize the cost given that it eliminates hospitalization
for patients and shortens Patients’ length of stay. PMC should take
advantage of possible shifts to pay for performance or pay for outcome
reimbursement models proposed under healthcare reform legislation.
Purpose and Objective
Pacific Medical Care mainly targets the primary service area, which
constitutes counties within the closest proximity to PMC. Pacific
Medical Center also targets patients from the lower-income area in an
attempt to respond to the disparities for the disease in the service
area. The program largely focuses on the adult population and has laid
concrete plans for future expansion into the pediatric market. The
proposed services entail diabetes screening, laboratory services,
dietician consultation, and assessment by physicians.
Retails clinics represents a non-traditional setting for accessing
primary care services. Retail clinics have a profound impact on the
local healthcare delivery systems. The modern healthcare system
accommodates multiple entry points for consumers, which has allowed
growth of retail clinics across America. Retail clinics avail superior
convenience by addressing the ills and frustrations of waiting patient
(fifteen minutes or less wait times, no appointments required for the
evening and weekend). The retails services availed by retail clinics
mainly compete directly with the low-acuity and non-urgent care
conventionally delivered within physician office settings. Consumers
with a choice between a quick, convenient health care experience within
retail setting or the long wait times linked to physician offices are
highly likely to opt for retail clinics. Furthermore, the low service
cost charged by retail clinics make it an additional incentive for
consumers, as well as insurer willing to take advantage of such an
offering.
Outpatient diabetic clinics are presently experiencing explosive growth
and moderately rising demand for their services. Growth expectations
within the next few years can be regarded as high, but attainable based
on the current environment. Considerable opportunities exist for the
industry through aggressive entering on new markets, availing assistance
to public health sector and disrupting conventional health care
financing schemes.
The growth of disruptive innovation hinges, in part, on continually
pushing into fresh markets with possibly higher profitability, while at
the same time, limiting the segments of incumbents. The bulk of retail
clinic operators presently operate within extremely narrow band of
services. This means that an expansion of the routine preventative and
chronic care has the possibility of opening up extra markets as per
overall visits. This is likely to generate a new source of visits for
clinic operators as it broadens consumer access to a broad array of
services.
Budgeting process
The budget process can be regarded as a tool for fostering corporate
accountability and effectiveness, instead of a mere vehicle for
allocating resources and controlling expenditures. Modern organizations
encounters constraints and demands for enhanced services and continually
discuss, experiment with, and implement new modes of budgeting.
Budgeting is a continuous process, and its preparation starts well ahead
of the year to which it relates (Haerifar, 2012). Managers should be
capable of exercising control over the organizations that they oversee
to ensure that organizations are keeping to plan, and necessary actions
undertaken to put it back on track. This is central to the development
of realistic financial performance objectives and budgets. Effective
financial management systems and processes for tracking resource
utilization are critical in enabling departments make effective
utilization of resources (Haerifar, 2012).
Review of previous budget by managers
Budgeting is a critical exercise for allocating revenues with the aim of
attaining the economic and social objectives of the outpatient diabetes
centre. This entails management of expenditure in a way that will
generate the most economic impact from the delivery of services while at
the same time supporting a healthy fiscal position. The first in
establishing a budget rests on looking at the organization performance
for the current year. The analysis of the company’s current
environment avails information and insight, which is essential in
predicting the future by looking at the leading indicators and prominent
drivers of the business for the present year (Haerifar, 2012). This
helps in the determination of key variables that the business depends
on, as well as the examination of the external factors.
Coming up with a New Budget
Planning constitutes making forecasts and assumptions regarding the
organization’s external environment such as issues regarding actions
of competitors, and consumer spending. Coming up with a new budget
during the budgeting process allows the organization to plan and manage
its financial resources, and support the implementation of diverse
programs and projects that best foster the growth of the outpatient
centre. The budgeting process starts with an analysis of the overall
economic targets, revenue projection, and expenditure levels to ensure
that they align with the available resources (Dugdale & Lyne, 2010).
Once the outpatient diabetic clinic is operational, it is critical to
plan and tightly manage the financial performance of the business.
Creating a budgeting process can be regarded as the most efficient way
of keeping the business and finances on track. Successful businesses
invest their time to creating and managing budgets, reviewing business
plans and regularly monitoring finance and performance. Structured
planning can be regarded as one way allowing business managers to
concentrate their resources on enhancing profits, minimizing costs and
enhancing returns on investments (Dugdale & Lyne, 2010). The core
benefits of business planning rests on allowing one to create a focus
for the direction that the business and availing targets that will aid
the business to grow (Shah, 2007). This also avails a chance for the
management to stand back and appraise performance, as well as the
factors affecting the business.
Discuss new budget with clinic management
A budget can be outlined as management’s quantitative expression of
plans for a future period and is central to financial management of any
organization. Budgeting can serve as controlling and planning system in
which a company’s objectives and performance objectives documented in
financial terms. This makes it necessary that the management discuss
any new budget during the budgeting process with the aim of taking the
necessary corrective actions (Haerifar, 2012). The objectives for the
year function as a high level business plan guided by set benchmarks
that the company seeks to attain.
Environment Analysis:
Economic
There are several factors that can be highlighted as either driving or
disrupting the growth of retail clinics, as well as the demand of
services: quality of care, consumer satisfaction, regulatory concerns,
financial viability of the retail clinic services, and cost-sharing for
retail clinic services. Consumer satisfaction can be gauged in areas
such as cost, quality of care, convenience, and having qualified staff
to avail care.
Diabetes is increasingly becoming an epidemic, and the cost of treating
diabetes has been rising over the years. Medicines account for the
biggest share of direct share of direct cost followed by laboratory
investigations. There are a number of issues, which will impact on the
future of the healthcare industry with the dominant debate centering on
health care reform and universal coverage. Another key emerging trend
centers on the shift in Medicare reimbursement towards payment for
outcomes (performance) and primary medicine.
Market
Product strategy
The services offered by PMC will be developed in a number of phases
detailing the establishment of patient education components for diabetes
care and primary endocrinology specialty. The management also seeks to
establish collaboration between secondary support services including
prosthetics/orthotics, pharmacy, podiatry, lab services, and behavioral
health. The long-term objectives will rest on creating large, all
inclusive multi-specialty center, which will enable all patients to
obtain medical care within the clinic.
Price strategy
The pricing of the services draws from the present reimbursement rates.
Outpatient clinical visits will be regularly billed and reimbursed. All
the diabetes supplies will be set as per the market standard prices for
self pay insurance reimbursement. The medications via the hospital
pharmacy will be charged at reimbursable prices plus co-pays.
Place strategy
The location of Pacific Medical Center captures maximum attention with
its own entrance, logo display, and proper signage (Shankar & Carpenter,
2012). This is essential given that a majority of all medical services
are adjacent to the medical center.
Promotional strategy
PMC will utilize a multi-faceted strategy in which an annual budget of
$20,000 will be utilized to advertise the facility. The objectives of
the promotional strategy centers on: establishing name recognition
broadening market to new patients increasing the number of new physical
referrals enhancing community awareness and involvement in matters on
diabetes and, broadening market to minority patients. In doing so,
PMC’s marketing efforts will be relayed through websites and media
outlets with the aim of introducing and building the brand (Shankar &
Carpenter, 2012). Targeted campaigns detailing diabetes education
information will be employed with the aim of reaching patients with
diabetes.
Competition
Patients can be cared for by the medical center physicians and private
physicians and could also access services in the county health
departments. It is likely that physicians may be unwilling to refer
complex diabetic patients to PMC if they perceive the center to be a
direct competitor. Locally, there are not many significant medical
facilities that would generate competition. PMC has a number of
significant competitors for diabetes care, namely: Duke Medical Center,
Lenoir Memorial Hospital, and Wake Medical Center.
Internal Analysis
Performance
PMC has conducted a feasibility analysis to determine the market
potential and has unearthed that the market is ripe for a new stand
alone outpatient clinic. The outpatient facility will potentially serve
a diverse or expanded market area.
Management and Staff
The efficient delivery of the outpatient services program hinges on the
competency of individuals and teams across all staff operating within
outpatient services. The staff will have to develop fresh skills or
upgrade the existing ones as dictated by the local policies and
procedures. The staff engaged in the implementation of PAM will operate
within various facets such as clinical, clerical/administrative,
managerial, or clinical and will undertake training and regular
updating.
The core barrier to entry for the outpatient center is financing a new
center. Another possible barrier rests on hiring highly trained
personnel, especially endocrinologists who number just 3,000 nationwide.
Nevertheless, PMC has access to an Endocrinology fellowship program
which could be a possible source of specialized personnel.
Infrastructure
The layout of the clinic facilitates staff efficiency by minimizing
distance of necessary travel between frequently utilized spaces. The
building also makes efficient use of space by locating support spaces to
ensure that they may be shared by adjoining functional areas.
Customers
Pacific Medical Center will avail comprehensive care for complex cases
of diabetes and preventive management for diabetic patients. PMC will
avail services in nursing case management and education, endocrinology,
and nutrition counseling. The facility will utilize a collaborative
effort instituted to enhance diabetes patient management coupled with
multi-specialty care including prosthetic/orthotics, physical/occupation
therapy, would care, mental health, optometry, vascular surgery, and
nephrology.
Strengths
PMC strength lies in its mission of improving the health of diabetic
patients, as well as having skilled and expertise medical staff
committed to offering patient–centered care. Pacific Medical Center
has a strong commitment towards availing high quality care in a cost
efficient way guided by the goal of enhancing patient satisfaction. PMC
has demonstrated its capability to be a market leader in availing
diabetic services owing to its capabilities and cost advantages.
Outpatient services are cost efficient as they mainly cost less.
Furthermore, staff within the facility is sufficiently trained in the
service they provide mainly by specializing in one form of treatment or
procedure. Some of the essential success factors for PMC entail the
fact that PMC is a brand establishment with an opportunity of building a
good reputation PMC is known for effective chronic disease management
centering on prevention, collaborative coordination with multi-specialty
care, education, and early and on-going screening. The other strength
arises from the fact that PMC facility is accessible and convenient to
the target market. PMC can utilize these strengths to satisfy key
performance indicators established as per national and state standards
such as decreased mortality rates, increased screening, and decreased
inpatient services.
Weaknesses
Some of the weaknesses that the facility faces include gaps in
capabilities/service areas as the facility were recently launched. The
facility is also disadvantaged as it has delayed in instituting a clear
marketing plan in place.
Opportunities
For numerous years, the health care system has witnessed a continuing
reduction in the number of beds required for inpatients. This arises
from the fact that an outpatient facility is less expensive to build and
operate relative to a hospital. As such, PMC can take advantage of
competitor vulnerabilities and new market segments that avail enhanced
profit margins. The strategic location of the facility means that the
outpatient center will be capable of serving large population. The
Pacific Medical Center is an enormous opportunity to herald significant
difference within the lives of diabetic patients by introducing
innovative products into the market. The projected demand for diabetic
care is likely to increase based on the high incidence and prevalence
rates. Other opportunities include introducing fresh services and
entering into new markets.
Threats
One of the dominant threats that Pacific Medical Center faces hinges the
entry of a new competitor into the home market. PMC is also at risk of
suffering from adverse changes within reimbursement or regulations,
which may negatively impact on the operation of the facility. Other
threats include new or increased competition, volatile costs/revenue,
and changes within market demand or referral sources.
Variance Analysis
A favorable variance is that which allows a business to enhance its
profits such as if sales revenue surpass the budgeted amount. Managers
should create diverse financial and budgetary planning tools that they
monitor at regular intervals. Budgeting and budgetary control force
management to think about the future and set detailed plans for
attaining the set targets for each department (Shah, 2007). The
operational costs (such as Revenues, Salaries and benefits, and
Supplies) require be monitoring and controlling to guarantee financial
discipline. The structuring of the budget based on verifiable
information makes it easier to create an operating budget that truly
mirrors present needs (income to keep the facility operational). As
such, an operational budget should be adapted (regularly
amended/flexible) to reflect shifts in the amount of revenue generated
every month. One can utilize a number of strategies to maintain control
of the project and prevent significant cost overruns:
Continually forecast the budget
In most cases, projects running devoid of the regular budget management
and re forecasting encounter difficulties in their operation. This
arises from the fact that regular budget oversight safeguards the budget
from getting out of hand. This necessitates frequent review of the
budget plan so as to avoid budget overruns.
Frequently forecasting resource usage
It is essential to forecast resource usage by reviewing cost items such
as staff cost in relation to projected future resource needs. This
guarantees that one fully utilizes the resources that are available and
possesses the right resources ready for the operation of the clinic.
Frequently revisiting the resource forecast aids to keep the project
budget on track.
Recommendation
PAC should vigilantly balance mission and margin considerations when
charting the direction that will best serve diabetic patients. Diabetes
is not simply an easily isolated disease that impacts on only on the
service line. Diabetes generates a ripple effect that crosses all areas
of the continuum of care availed by PAC. Based on financial analysis
and non-financial considerations, PAC should continue with plans to
launch the facility. Outpatient facilities such as PMC can in some cases
be perceived as demanding environments. The provision of safe,
high-quality care necessitates that the facilities run efficiently.
References
Dugdale, D., & Lyne, S. (2010). Budgeting practice and organizational
structure. Oxford: CIMA Pub.
Haerifar, P. (2012). Budgeting process, is it really necessary?
Norderstedt Germany: Auflage.
Shah, A. (2007). Budgeting and budgetary institutions. Washington, D.C:
World Bank.
Shankar, V., & Carpenter, G. S. (2012). Handbook of Marketing Strategy.
Cheltenham: Edward Elgar Pub.
Appendix 1
INITIAL INVESTMENT
Pacific MEDICAL CENTER
Equipment Quantity Cost Subtotal Total
Premises 3000 $ 15 $ 45,000 $ 7,500
Remodelling 3000 $ 115 $345,000 $345,000
Computer Network
$119,900 $119,900 $119,900
Computer purchase 10 $ 15,000 $ 15,000 $ 15,000
Printing devices 2 $ 380 $ 760 $ 760
Telephone
$ 7,000 $ 7,000 $ 7,000
Pagers 1 $ 2,000 $ 2,000 $ 2,000
Clocks 1 $ 5,000 $ 5,000 $ 5,000
Laboratory Equipment
$ 3,000 $ 3,000 $ 3,000
Examination Tables 5 $ 1,687 $ 8,435 $ 8,435
Wall Transformer Set 5 $ 850 $ 4,250 $ 4,250
Bariatric Scales 1 $ 500 $ 500 $ 500
Pulse oximeters 2 $ 400 $ 800 $ 800
Glucometers 5 $ 100 $ 500 $ 500
Screens 1 $ 1,000 $ 1,000 $ 1,000
DVD Player 1 $ 70 $ 70 $ 70
Projectors 2 $ 1,000 $ 2,000 $ 2,000
Office Desks 2 $ 1000 $ 2,000 $ 2,000
Chairs 5 $ 300 $ 1,500 $ 1,500
Stools 5 $ 150 $ 750 $ 750
Office Furniture 1 $ 10,000 $ 10,000 $ 10,000
Tables 10 $ 280 $ 2,800 $ 2,800
Chairs 30 $ 70 $ 2,100 $ 2,100
Photocopying Machine 1 $ 110 $ 110 $ 110
Fax Machine 1 $ 100 $ 100 $ 100
Total       $543,190
Appendix 2
Appendix 3
Implementation Timeline for PMC   Months Year
  0 1-3 3-6 6-9 9-12 12-15 15-18 18-21 21-24 3 4 5
Marketing
 
Phase 1 Materials
     
 
Phase 2 Referrals
 
 
Phase 3 Opening
   
 
Phase 4 Post Opening
       
 
Operations
 
Board Approval  
 
Sign Lease
 
 
Space Upfitted
       
 
Purchase/Lease Furniture & Equipment
   
 
Technology in Place
   
 
Inventory Stocked
 
 
Consultant Contracted
 
 
Policies and Procedures Developed
         
 
Recruitment
 
Clinic Administrator
     
 
Endocrinologist #1
     
 
Endocrinologist #2
             
 
Nurse Practitioner
       
 
Other Staff
         
 
Evaluation and Development
 
Evaluate KPIs Monthly
             
Stepped Growth Expansion
 
 
Evaluate Multi-site Expansion                          
Appendix 4
Budget Preparation Flow Chart
PACIFIC MEDICAL CENTER PAGE * MERGEFORMAT 3
PACIFIC MEDICAL CENTER PAGE * MERGEFORMAT 1
Capital expenditure budget
Balance sheet budget
Cash Budget
Profit Plan
Cost center budgets
Long-range sales forecast
Strategic and long-range plan
Sales budget
Marketing expense budget
Inventory Budget
Administrative budget
Production budget

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